Bill Shorten

Minister for Financial Services & Superannuation

14 September 2010 - 1 July 2013

Transcript of 20/11/2012

NO.008

Interview with Jon Faine

ABC 774 Melbourne,
Mornings with Jon Faine

20 November 2012

SUBJECTS: Superannuation funds

JON FAINE:

A meeting is taking place in Melbourne today which has massive repercussions for the construction industry, industrial relations and your superannuation. Some Victorian construction industry trade unionists are trying to put some sort of pressure on their superannuation fund to withdraw investment in projects linked to a company they're doing battle with. The Union is the CFMEU.

They're locked in battle with Daniel Grollo's Grocon and the Union is now saying to the union based superfund Cbus and its Chairman Steve Bracks, former Premiere, that they should stop funding projects being built by Grocon as part of the Union's battle with the business. This is absolutely fascinating because superannuation funds are supposed to be independent of the unions that they're linked to.

Well all of this falls within the ambit of the Minister for Employment and Workplace Relations as well as Financial Services and Superannuation, Bill Shorten who is no stranger to any of the major players in this dispute. Mr Shorten, good morning to you.

BILL SHORTEN:

Good morning Jon.

JON FAINE:

You've got Labor heavyweights on both sides here. You've got Labor heavyweight Steve Bracks as the Chair of Cbus and you've got trade union officials and Labor office holders throughout the CFMEU and other unions, now flexing their muscles through superannuation arrangements. What do you do?

BILL SHORTEN:

Jon, the role of trustees on any superannuation fund, be it a retail fund or an industry fund and an industry fund is purely one which has employee representation as well as employer representation on the Board. The role of Directors is to serve the best interests of the fund members and to have no other agenda, so let's set out what the rules are straight away.

There is no role for industrial relations tactics in the allocation of investment decisions for member's superannuation funds. Having said what the rules are Jon, it is not the case despite media reports to the contrary in one paper and that in fact Cbus has been making decisions on any basis other than best interests of members. There has been no decisions taken in any other regard, nor any evidence seriously contested.

JON FAINE:

Let's put it to the test and I noticed with interest that Ted Baillieu, the Victorian Premiere weighed in at this - on this at his press conference as well yesterday, but Mr Shorten I'm a member of a super fund. I don't want my super fund investing in, for instance, tobacco companies. Right or wrong?

BILL SHORTEN:

Well if you don't want them to that's your choice but most superannuation funds would have a policy about investment classes and categories and some funds have a few about investing in tobacco companies. But that view will be formed at the Board level based on a whole lot of criteria, driven by the best interests of the members. Now if a fund invests in a particular investment that an individual doesn't like, they are free to take their superannuation account and move it into another public offer fund.

That's your right, but let me be very clear. The reason why this is a debate is because industry funds which represent a significant proportion of superannuation have representatives from employers and from employees. Some people in business don't like that. They think there is no role for employee representation on superannuation funds...

JON FAINE:

And this is the other way around. This is now thousands of unionists organised through the ETU, the Trade - Electrical Trades Union and the CFMEU, saying if you are doing construction projects with someone we are locked in a bitter fight over who's suing the Union for its very existence, we'll withdraw our funds. We will collapse this super fund unless you do something about it.

BILL SHORTEN:

Let's be straight about this. Cbus is a very large fund. The Directors, all of the Directors, member nominated Directors and employer nominated Directors act in the best interests of the fund members. People outside the decision making structure of the Board are free to express views, but what I know is that the Cbus fund to the best of my knowledge makes its decisions based on investment returns, best interests of members.

JON FAINE:

If thousands of members of a fund say we'll withdraw our membership and our balance, our capital and move it to a rival fund, that's a threat to the current structure that trade union based superannuation works under isn't it?

BILL SHORTEN:

No. Individuals always have the right to move their money individually.

JON FAINE:

But thousands of them at once, organised by a union Mr Shorten...

BILL SHORTEN:

Well I'm not going to start dealing - I am not going to deal with hypotheticals. Superannuation is far too important for scaremongering. APRA, the Australia Prudential Regulatory Authority, regulate superannuation funds. They have a high degree of confidence in Cbus to the best of my knowledge and Directors make decisions based on the beneficial interests.

It is always exciting for journalists to speculate about what might happen - I'm not talking about you but this print article which has caused some of this interest - to stir the pot. But when it comes to literally tens of thousands of people's retirement savings, what we see is the Directors of superannuation funds, retail funds, industry funds, corporate funds, public sector funds make decisions based in the best interests of members first and foremost. Other considerations are not relevant at that Board table.

JON FAINE:

I wonder if we're at the cutting edge here in the same as we've seen the power of social media and its influence over advertisers on a radio show. We've seen the power of social media and its influence over political campaigns in the United States, in Europe and here as well and now we're seeing trade unions mobilising their members in their thousands threatening a boycott, indeed a major realignment in trade union construction industry superannuation here over an industrial dispute.

BILL SHORTEN:

Individuals, no matter who they are, whether or not they're construction workers or executives or nurses, they can decide which superannuation fund that they want to keep their money in. It's a free country and that's their choice. But what I believe in is the integrity of the system and what I also believe in is that Directors are obligated and I know that they do this, the trustees of superannuation funds, whatever their background, it doesn't matter if they're a man in a top hat or a man or woman in a hard hat. If you're a Director of a fund you're obligated to act in the best interests of members and that's what will be happening, so...

JON FAINE:

Absolutely, but here is the CFMEU going too far here then?

BILL SHORTEN:

Well I do not believe that industrial relations disputes should be ever played out at the board rooms of superannuation funds, full stop. What matters is the best interests of the members of the fund and by the way, that is what is actually happening, the scenario which is the best interests of the members of the fund. Anything else is just chat and isn't relevant to what's happening in the fund.

JON FAINE:

Before I let you go, you're also mentioned in dispatches today as getting involved in resolving a dispute at a brewery, the Little Creatures Brewery in Geelong where there's also a standoff between CFMEU members and the client, the construction company there. What are you doing in Geelong?

BILL SHORTEN:

Oh well, I think the Trades Hall is - Brian Boyd, the Secretary of Trades Hall's actually doing the roll up your sleeves work with the leaders of the two unions which are involved in this dispute with the company and with the company. I've just expressed my view in writing and I've spoken to the Trades Hall as well, just saying that we've got Supreme Court Orders. We've got lawful police directions. They have to be adhered to. In terms of the actual ins and outs of the dispute, there's people close to the dispute all working on that matter, but I've just made it very clear that from the Federal Government's perspectives, whilst some of the disputes are covered by State laws, we would expect unions to adhere to what the State laws are saying.

JON FAINE:

We shall see where that gets to during the course of the busy day today. Thank you for some of your time this morning.

BILL SHORTEN:

It's a pleasure, thank you Jon.

JON FAINE:

Bill Shorten, Minister for Employment and Workplace Relations but also in charge of Superannuation in the Gillard Government.